Charts That Define The Worst Week For Markets Since 2008
The NSE Nifty 50 scaled its lifetime high level of 12,430 on January 20. Exactly two months later, it has fallen 30 percent from its peak.
The last four weeks have seen the 50-stock index fall 7.3 percent, 1.9 percent, 9.4 percent and 12.1 percent each. The drop this week was the worst since October 2008, despite the Sensex and the Nifty 50 recording their biggest one-day gain in over a decade on Friday.
Here are seven charts that summarise the week:
Best & Worst In The Same Week
The S&P BSE Sensex and the NSE Nifty 50 were down 12 percent each this week. The losses were partially cushioned by the 6 percent gain on Friday. This was the best one-day jump for both the indices since 2009. The indices still posted their worst week since 2008.
Wealth Erosion Continues
While last week saw Rs 15 lakh crore of investor wealth being wiped off, this week was no different. Rs 13 lakh crore was eroded from India’s market capitalisation in the four days of decline this week.
Financials Lead The Sell-Off
The Nifty Bank index saw its biggest weekly fall since 2004, led by heavyweights HDFC Bank Ltd. (down 17 percent for the week) and ICICI Bank Ltd. (down 22 percent). However, the biggest underperformers were IndusInd Bank Ltd. and Axis Bank Ltd., which saw sustained selling pressure through the week.
The Ones That Bucked The Trend
46 out of the 50 stocks in the Nifty index ended the week with losses. Four defied the rout to post gains. Oil and Natural Gas Corporation Ltd. was the top performer on the index, followed by FMCG bellwethers Hindustan Unilever Ltd. and ITC Ltd., along with Dr Reddy’s Laboratories Ltd., completed the list of gainers.
Currency Weakens Further
If the equity markets had it tough, the rupee too saw its second worst weekly drop since August 2019. The local unit depreciated 1.75 percent against the U.S. dollar. It touched a record low on Thursday, falling to 75.31 versus the greenback.
Central Bank Steps In To Cool Yields
Yields on India’s 10-year government securities cooled after the Reserve Bank of India’s decision to step up bond purchases.
The RBI, which had already purchased bonds worth Rs 10,000 crore this week, will buy an additional Rs 30,000 crore worth of bonds via two open market operations this month. That pushed bond prices higher and yield fell 13 basis points to end the session and a volatile week at 6.26 percent. Bond prices and yields move inversely.
How Low Can Oil Go?
Oil prices too had a week of extreme volatility. While Brent crude fell to its lowest level since 2002 on Wednesday to below $25 a barrel, oil saw an equally sharp rebound in Thursday’s session.
The Road Ahead
Pramod Gubbi of Marcellus Investment Managers said it is important to focus on the fundamentals of companies investors choose as timing the market is impossible. “Our investors are investing more aggressively in select quality companies,” he said in an interaction with BloombergQuint.
Hiren Ved of Alchemy Capital advised to stagger investments over a period of time to take advantage of the market correction. “People’s conviction will be repeatedly tested before the markets bottom out, but the bottom of the market will be known only in hindsight.”